Scotland's National Strategy for Economic Transformation - Delivery Plans October 2022

Programme 3: Productive Businesses and Regions

Outcomes & Objectives

Our aim is to make Scotland's businesses, industries, regions, communities and public services more productive and innovative.

The Productive Businesses and Regions Programme seeks to deliver a step-change in Scotland's productivity performance, addressing regional inequalities in economic activity as well as boosting traditional and digital infrastructure. As the United Kingdom faces a cost of living crisis, it is more pertinent than ever that the resources available are maximized to achieve their full potential. Through assuring that Scotland makes the best use of the resources available by boosting productivity, addressing regional inequalities and making improvements to our infrastructure we will be able to transition to a greener economy that is more efficient as well as competitive globally. It is critical that these resources are shared in an efficient and equitable way across all parts of Scotland, including ensuring that traditional access challenges in our rural and Islands communities are addressed.

Whilst the following Delivery Plan provides an update on current progress of the initial actions outlined in the NSET, a more in-depth Plan is currently being developed by a Programme Delivery Board in order to ensure that this Programme will be able to respond to the socio- economic changes Scotland may face throughout the upcoming decade, including the current cost of living crisis that we are experiencing.

This further development of Programme 3 will also assure that initiatives are in line with the ethos of the New Deal for Local Government in Scotland, outlined in the recent Spending Review, to build a relationship between the Scottish Government and Scotland's Local Authorities in order to balance greater flexibility over financial arrangements with clearer accountability for delivering national priorities.

Projects

Project 8: Improve Connectivity Infrastructure and Digital Adoption Across the Economy: This will see the delivery of the Strategic Transport Projects Review 2 (STPR2) to: help make Scotland more accessible for residents, visitors and businesses; create better connectivity with sustainable, smart and cleaner transport options; and highlight the vital contribution that transport investment can play in enabling and sustaining Scotland's economic growth. In addition, this project will assure Scotland is facilitated with an efficient and resilient digital infrastructure. Through continued investment in improved broadband, fibre and mobile coverage for residential and business premises; data centre development and digital business growth support; and improving Scotland's telecoms infrastructure through laying subsea fibre connections and 4G improvements for island and rural regions.

Project 9: Upskill business and public sector leaders, pioneering new approaches to driving productivity improvements: This will focus on the design and implementation of programmes, including productivity ambassadors and expansion of SCDI-led Productivity Clubs to upskill business and public sector leaders in the practical actions they can take to boost productivity. Going forward, the project will also be using the Wellbeing Economy Monitor and the Centre for Workplace Transformation to guide future productivity growth planning.

Project 10: Realise the potential of the different economic and community assets and strengths of Scotland's regions: This will focus on supporting our regions and communities to maximize their assets through working with Scotland's Regional Economic Partnerships to deliver strong regional economic policies and tailor interventions to evidenced regional strengths and opportunities. This will also be achieved through the expanding Community Wealth Building and social enterprise initiatives to support regional regeneration and the wealth of local communities.

Measurement

The Programme will be measured against the overall ambitions of NSET – to make Scotland Fairer, Wealthier and Greener, as well as using the National Performance Framework and recently published Wellbeing Economy Monitor.

This will be achieved through the development of draft metrics to demonstrate the extent to which the output from the actions of this Programme are likely to shift performance. This will be underpinned by logic models which demonstrate the linkages between the actions taken, outputs produced and ultimately the expected impact on the Scottish economy.

Indicators will be adopted to inform both the NSET Delivery Board and the Programme Delivery Board of the difference that each individual action is making in achieving the overall aim of the Programme.

Indicators such as:

• productivity (GVA per hour worked)
• Business R&D spend
• proportion of businesses that are innovation active
• digital skills in businesses
• labour shortages

These indicators will likely be supported by broader evidence and other forms of measurement as the Programme matures.

NSET Phase: Delivered by 31 October 2022

Project 8:

Since the publication of NSET we have:

• Launched a Digital Productivity Lab Pilot – Through investment of £500,000 to run this pilot, in partnership with Lanarkshire Enterprise Services Limited (LESL), an offering support to 500 previous recipients of the Digital Development Grant. This support comes in the form of one-to-one advice and sessions from digital specialists that will help these businesses effectively implement and optimise their digital project for their business and staff.
• Provided faster broadband connectivity to over 10,900 premises through the R100 contracts and a further 2,400 premises through the R100 Scottish Broadband Voucher Scheme.
• Through the Scottish 4G Infill programme (S4GI), delivered two mobile masts in rural locations providing 4G services to approximately 40 unserved premises. This takes the programme's cumulative total up to 29 masts providing 4G coverage to over 1,200 previously unserved premises.

Project 9:

Since the publication of NSET we have:

• Developed a new measure of the resilience of the economy – through monitoring, assessing and identifying actions to future-proof the productivity of Scotland's economy over the long term, including on issues such as climate adaptation, cyber security, international trade links and critical domestic supply chains.
• Expanded Scotland's SCDI-led network of Productivity Clubs for businesses to use peer- to-peer learning to identify opportunities to improve productivity. Following on from the delivery of a grant of £200,000 from the Scottish Government in April 2022 to expand the reach of this initiative, a new club has been developed to serve the Tay City region.

Project 10:

Since the publication of NSET we have:

• Completed a Review of Regional Economic Policy in Scotland – which offers a clear insight into the use of regional geographies and structures to deliver more effective inclusive growth. This Review is in response to economic and policy shifts as a result of COVID-19 and EU Exit, which led to the loss of vital regional support from the EU Structural Funds. The Review itself offers an approach for Scottish Government to create a positive environment for regional economic success and will discuss the local, regional and national policies aimed at reducing economic regional inequality. This will be published shortly.
• Community Wealth Building (CWB) – this strategic approach to economic development seeks to enable local and regional anchor organisations, through procurement, investment and other means of development, to create new fair work opportunities, help local businesses to expand, shorten supply chains and place more assets in the hands of local people and communities. We have put in place programme governance to commence work on a Bill, including institution of a Bill Steering Group chaired by Tom Arthur, Minister for Public Finance, Planning and Community Wealth. We have co-produced, with EDAS and CLES, a CWB Guide to support local authorities and partners develop their CWB Action plans.

NSET Phase: In Delivery

Project 8:

• Delivery of the Strategic Review of the National Transport Strategy (NTS2): Following the publication of the draft strategic review in January 2022, this is currently in consultation and the STPR2 Final Report is due to be published by the end of 2022.^[3]
• Delivery is also ongoing in the digital connectivity realm, where accelerating access to future-proofed broadband networks is taking place. This includes: reaching 100% (R100) Programme contracts and the R100 Scottish Voucher Scheme (SBVS) delivering superfast connectivity, both of which are helping to increase full fibre coverage alongside the deployment of rural 4G network coverage and investing in the right conditions in place to facilitate the deployment of 5G. These objectives will offer significant economic benefits to businesses, communities and individuals. At present, it is expected that 16 new subsea fibre connections will be completed this year, coupled with our ongoing work to deliver up to 55 new mast locations to deliver 4G services across Scotland by March 2023.
• Working with Scottish Futures Trust and other partners to deliver on our commitment for Green Datacentres and our Digital Connectivity Vision and Action Plan, which will stimulate new economic growth through attracting investment in international subsea fibre connections and sustainable data hosting facilities.
• Development of a Full Fibre Charter and engagement across the sector, both with businesses, government and operators; barriers to telecoms deployment will be tackled in order to maximise commercial investment across Scotland.^[4] A strategic forum with industry will be established to identify and remove barriers to maximise commercial investment. This is coupled with our continued commitment to engage with the UK Government and OFCOM, who have legal and regulatory responsibility for the telecoms sector, to ensure that the position of the Scottish Government and Scotland's opportunities and challenges are articulated, ensuring that the regulatory and pricing framework is planned and delivered to meet the future needs of Scotland.

Project 9:

• Launch Scotland's new Centre for Workplace Transformation to support experimentation in ways of working post-pandemic that help attract and retain talent, and to enable ideas to be tested with the expertise of external organisations. The Centre will pioneer new approaches to driving productivity improvements, for example through researching and piloting the impacts of a shorter working week on the Scottish economy.
• Productivity Support through Scotland's Enterprise Agencies – in addition to the actions of NSET - Scotland's Enterprise Agencies currently provide a variety of packages of support to drive productivity within the private sector. This includes specialist advice, provision of discretionary funding support to businesses and community organisations to employ graduates to more tailored and specialist programmes, focus on key productivity areas of Business Improvement (SMAS), Innovation, Net Zero and Digital; developing specific skills sets within these areas that are key to vital productivity improvements.

Project 10:

• The Scottish Government is continuing to support Scotland's Local Authorities to each develop Community Wealth Building action plans.
• Wide stakeholder consultation on legislation principals to support the embedding of CWB, creating a fairer and more resilient economy. We have established an external Bill Steering group to support this work.
• Supporting the Development of Scotland's Regional Economic Partnerships (REPs).
• The consideration of business sectors will also be important, with each region having its own strengths. A number of strategies have already been developed which align well with NSET, such as Scotland Outlook 2030: Scotland's Tourism Strategy and Getting the Right Change, the retail strategy for Scotland. Programme 3 delivery will be key to realising these strategies as holistic interventions are considered at the regional level.

NSET Phase: Delivery Pending

Project 8:

• Development and delivery of a Digital Productivity Fund - focused on supporting business to improve firm-level productivity. It is expected that the Digital Productivity Fund will introduce interventions to support businesses improve firm-level productivity and develop a more digitally mature business base.

Project 10:

• Working with our Enterprise Agencies, we will look to establish an industry-led Inclusive Business Review into how best to support social enterprise, employee-owned businesses and cooperatives in Scotland; supporting regional regeneration and the wealth of local communities. We anticipate the review will be established before the end of 2022 and report in 2023.
• A formal consultation on Community Wealth Building Legislation to be commenced in Spring 2023

NSET Phase: In development

Project 10:

Development underway

• Development of co-producing Just Transition Plans alongside regional partners.

Project 8:

• As Scottish households are being squeezed by high levels of inflation and increases in energy bills, further consideration will take place regarding Scotland's wider infrastructure as we transition to a low-carbon economy to assure that resources available are being utilised efficiently and effectively.

Project 9:

Development to begin

• Recruitment of Productivity Ambassadors: In order to identify where and what forms of support are needed across the country, Scottish Government is currently undertaking a mapping exercise to outline what productivity support is currently available. Going forward it is hoped that Productivity Ambassadors can be sourced from a wide variety of individuals from various sectors who can share their expertise with others to promote best practice.

• The upskilling of Scotland's leaders: In order to identify where and what forms of support is needed across the country, Scottish Government are currently undertaking a mapping exercise to outline what productivity support is currently available. Going forward it is hoped that we can utilise what is already being offered and build upon this to develop a Programme of support which will tackle the challenges facing productivity across our economy.

Working with Stakeholders & Partners

Who are we relying on for delivery of the programme?

Due to the broad focus of the Programme, delivery of the Programme will be provided through various parties including both public and private sector agencies.

At present these include the following during the lifespan of the Programme:

• Enterprise Agencies (Scottish Enterprise, Highlands and Islands Enterprise, South of Scotland Enterprise)
• SCDI
• Regional Economic Partners
• Local Authorities
• Wider contractors

Who are we involving and how (partners/stakeholders)?

In order to achieve maximum success, Programme 3 will require engagement with stakeholders and partners across the regional landscape from the public sector, businesses and communities. This will include, but not be limited to:

• Independent experts
• Scotland's Regional Economic Advisory Group
• Private sector
• Academics
• Regional actors (including Scotland's Regional Economic Partnerships)

Who and where will benefit (people, places and sectors)?

This Programme tackles the challenges and seizes upon the opportunities of every region of Scotland, ultimately providing benefit for all of society.

Governance

To assure that this Programme of projects and subsequent actions continues to meet the ever- changing needs of Scotland's businesses and regions, the Scottish Government has established a Programme Delivery Board of key stakeholders encompassing the views of both delivery partners, wider business and the regional perspective. This Board, chaired by Monica Patterson (SOLACE), alongside the over-arching NSET Delivery Board, will oversee the rollout of the activities that we are still developing to make sure their result achieves the greatest impact across Scotland.

In order to achieve maximum benefit for every region, further development of the Programme will be carried out through advisement with Scotland's Regional Economic Partnerships (REPs).

Going forward, the Scottish Government will continue to engage with REPs individually as well as collectively through the REP Network regarding the Programme to ensure their views can be appropriately embedded into future decision making.

The success of this overall programme will be monitored continuously to make sure that the initiatives outlined are as impactful as they can be. This will be carried out with support from the Programme Delivery Board and be on a project basis.

Delivery phased timeline

This timeline provides the pipeline of activity and planned milestones as it stands. As budgets become clearer and time progresses other projects and milestones will be added and timelines updated.

Phase 01: What we have delivered to date

Apr 2022

Grant letter for SCDI Expansion of Productivity Clubs signed

Apr 2022

4G mobile mast in Bogton Turriff active

Jun 2022

Launched a Digital Productivity Lab Pilot

Jun 2022

4G mobile mast in Skerray active

Sep 2022

First meeting of Tayside Productivity Club

Phase 02: What we are already doing

Nov 2022

Review of Regional Economic Policy in Scotland published

Dec 2022

STPR2 Final Report published

Dec 2022

16 new subsea fibre cables completed

Mar 2023

Up to 55 new mast locations to deliver 4G services

Mar 2023

Consultation on Community Wealth Building Legislation to commence

Dec 2023

Community Wealth Building Review published

Phase 03: What we are planning to deliver

As budgets become clearer and time progresses other projects and milestones will be added and timelines updated.